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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 333-33572
 
 DIAMOND TRIUMPH AUTO GLASS, INC.
  DELAWARE
(State or other jurisdiction of
incorporation or organization)
    
    23-2758853
(I.R.S. Employer
Identification No.)
 220 DIVISION STREET, KINGSTON, PENNSYLVANIA 18704
  (570) 287-9915
  þ o
 o þ




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DIAMOND TRIUMPH AUTO GLASS, INC.
 Form 10-Q
For the Quarter Ended June 30, 2005
 INDEX
 Page No.Part I. Financial InformationItem 1. Consolidated Financial StatementsCondensed Consolidated Balance Sheets 
June 30, 2005 (unaudited) and December 31, 2004
    
    
    3Condensed Consolidated Statements of Operations (unaudited) 
Three Months Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Operations (unaudited) 
Six Months Ended June 30, 2005 and 2004
    
    
    5Condensed Consolidated Statements of Cash Flows (unaudited) 
Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about
Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19Part II. Other InformationItem 1. Legal Proceedings
    
    
    20Item 6. Exhibits and Reports on Form 8-K
    
    
    21Signature
    
    
    22EX-31.3: CERTIFICATIONEX-31.4: CERTIFICATIONEX-32.3: CERTIFICATIONEX-32.4: CERTIFICATION
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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 
 June 30, 2005
    
    December 31, 2004(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,962
    
    
    $
    139Accounts receivable, net
    
    
    13,811
    
    
    
    10,160Other receivables
    
    
    462
    
    
    
    431Inventories
    
    
    11,936
    
    
    
    12,135Prepaid expenses
    
    
    1,609
    
    
    
    1,838Deferred income taxes
    
    
    
    
    
    
    Total current assets
    
    
    29,780
    
    
    
    24,703Equipment and leasehold improvements, net
    
    
    4, 306
    
    
    
    4,904Deferred loan costs and senior notes discount, net
    
    
    1,593
    
    
    
    2,050Other assets
    
    
    1,149
    
    
    
    380Total assets
    
    $
    36,828
    
    
    $
    32,037LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    14,305
    
    
    $
    12,231Accrued expenses:Payroll and related items
    
    
    6,225
    
    
    
    4,211Accrued interest
    
    
    1,685
    
    
    
    1,850Accrued income taxes
    
    
    465
    
    
    
    466Other
    
    
    2,424
    
    
    
    1,582Total accrued expenses
    
    
    10,799
    
    
    
    8,109Total current liabilities
    
    
    25,104
    
    
    
    20,340Long-term debt:Senior notes
    
    
    73,258
    
    
    
    79,758Credit facility
    
    
    1,250
    
    
    
    250Total long-term debt
    
    
    74,508
    
    
    
    80,008Total liabilities
    
    
    99,612
    
    
    
    100,348Series A 12% senior cumulative preferred stock  par value
$0.01 per share; authorized 100,000 shares; issued and outstanding
35,000 shares in 2005 and 2004, at liquidation preference value
    
    
    82,480
    
    
    
    77,745Stockholders equity (deficit):Common stock, 2005 and 2004 par value $0.01 per share; authorized
1,100,000 shares; issued and outstanding 1,026,366 shares in 2005
and 2004
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    13,840
    
    
    
    18,574Deferred compensation
    
    
    (97
    )
    
    
    (149
    )Retained earnings (accumulated deficit)
    
    
    (158,717
    )
    
    
    (164,191
    )Common stock in treasury, at cost, 15,000 shares in 2005 and 2004
    
    
    (300
    )
    
    
    (300
    )Total stockholders equity (deficit)
    
    
    (145,264
    )
    
    
    (146,056
    )Total liabilities and stockholders equity (deficit)
    
    $
    36,828
    
    
    $
    32,037
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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 
 Three Months Ended
    
    
    Three Months EndedJune 30, 2005
    
    
    June 30, 2004Net sales
    
    $
    58,901
    
    
    $
    56,930Operating expenses
    
    
    54,022
    
    
    
    52,269Income from operations
    
    
    4,879
    
    
    
    4,661Other (income) expense:Interest income
    
    
    (1
    )
    
    
    Interest expense
    
    
    202
    
    
    
    2,060201
    
    
    
    2,060Income before provision for income taxes
    
    
    4,678
    
    
    
    2,601Provision for income taxes
    
    
    
    
    
    
    2,158Net Income
    
    
    4,678
    
    
    
    443Preferred stock dividends
    
    
    2,402
    
    
    
    2,135Net income (loss) applicable to common
stockholders
    
    $
    2,276
    
    
    
    ($1,692
    )
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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 
 Six Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2004Net sales
    
    $
    112,439
    
    
    $
    110,306Operating expenses
    
    
    104,710
    
    
    
    103,941Income from operations
    
    
    7,729
    
    
    
    6,365Other (income) expense:Interest income
    
    
    (1
    )
    
    
    Interest expense
    
    
    2,256
    
    
    
    4,1492,255
    
    
    
    4,149Income before provision for income taxes
    
    
    5,474
    
    
    
    2,216Provision for income taxes
    
    
    
    
    
    
    1,839Net Income
    
    
    5,474
    
    
    
    377Preferred stock dividends
    
    
    4,734
    
    
    
    4,207Net income (loss) applicable to common
stockholders
    
    $
    740
    
    
    ($
    3,830
    )
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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 
 Six Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    June 30, 2004OPERATING ACTIVITIESNet cash provided by operating activities
    
    $
    6,738
    
    
    $
    4,625INVESTING ACTIVITIESCapital expenditures
    
    
    (555
    )
    
    
    (414
    )Proceeds from sale of equipment
    
    
    50
    
    
    
    86Decrease in other assets
    
    
    (769
    )
    
    
    9Net cash used in investing activities
    
    
    (1274
    )
    
    
    (319
    )FINANCING ACTIVITIESPayment for redemption of senior notes
    
    
    (4,641
    )
    
    
    Net Proceeds from credit facility
    
    
    23,000
    
    
    
    17,250Payments on credit facility
    
    
    (22,000
    )
    
    
    (19,750
    )Net cash used in financing activities
    
    
    (3,641
    )
    
    
    (2,500
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,823
    
    
    
    1,806Cash and cash equivalents, beginning of period
    
    
    139
    
    
    
    35Cash and cash equivalents, end of period
    
    $
    1,962
    
    
    $
    1,841
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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 
 Note 1. Significant Accounting Policies
  Preferred Stock
  Borrowings:
   7




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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
  Stock Option Plan:
    8




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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 Six Months Ended June 30,
    
    Three Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Net IncomeAs reported
    
    $
    5,474
    
    
    $
    377
    
    
    $
    4,678
    
    
    $
    443Add stock-based employee compensation expense
included in reported net income,
net of tax
    
    
    52
    
    
    
    9
    
    
    
    26
    
    
    
    4Deduct total stock-based employee compensation
expense determined under
fair-value-based
method for all rewards, net of tax
    
    
    (58
    )
    
    
    (10
    )
    
    
    (29
    )
    
    
    (5
    )Pro forma
    
    $
    5,468
    
    
    $
    376
    
    
    $
    4,675
    
    
    $
    442
 Note 2. Recent Accounting Pronouncements
   , ,
 Note 3. Executive Compensation
  9




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DIAMOND
TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
  Note 4. Legal Proceedings
     Note 5. Income Taxes
  10




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DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
     Note 6. Contingent Guaranteed Commitments
  11




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DIAMOND
TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY
 
 Payments Due By Period (dollars in thousands)Contractual Cash Obligations
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    TotalLong Term Debt
    
    
    
    
    
    
    
    
    
    $
    1,250
    
    
    $
    73,258
    
    
    
    
    
    
    
    
    
    
    $
    74,508Real Estate Leases
    
    $
    2,397
    
    
    $
    3,287
    
    
    $
    2,032
    
    
    $
    1,447
    
    
    $
    1,229
    
    
    $
    1,157
    
    
    $
    11,549Vehicle Operating Leases
    
    $
    1,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,752Bond Interest
    
    $
    3,388
    
    
    $
    6,776
    
    
    $
    6,776
    
    
    $
    1,694
    
    
    
    
    
    
    
    
    
    
    $
    18,634Total Contractual Cash
Obligations
    
    $
    7,537
    
    
    $
    10,063
    
    
    $
    10,058
    
    
    $
    76,399
    
    
    $
    1,229
    
    
    $
    1,157
    
    
    $
    106,443
 Amount of CommitmentExpiration Per PeriodOther Commercial Commitments
    
    2005
    
    Thereafter
    
    TotalStandby Letters of Credit
    
    $
    
    
    
    $
    4,841
    
    
    $
    4,841Operating Lease  Contingent
Guaranteed Residual Value
    
    
    13,785
    
    
    
    
    
    
    
    13,785Total Commercial Commitments
    
    $
    13,785
    
    
    $
    4,841
    
    
    $
    18,626
 Note 7. Subsequent Events
   12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Overview
     13




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Results of Operations
  Six Months Ended June 30,
    
    Three Months Ended June 30,2005
    
    2004
    
    2005
    
    2004$
    

%
    
    $
    
    %
    
    $
    
    %
    
    $
    

%(dollars in millions)
    
    
    
    
    
    
    
    
    
    (dollars in millions)Net Sales
    
    
    112.4
    
    
    
    100.0
    
    
    
    110.3
    
    
    
    100.0
    
    
    
    58.9
    
    
    
    100.0
    
    
    
    56.9
    
    
    
    100.0Operating Expenses
    
    
    104.7
    
    
    
    93.1
    
    
    
    103.9
    
    
    
    94.2
    
    
    
    54.0
    
    
    
    91.7
    
    
    
    52.2
    
    
    
    91.7Income From Operations
    
    
    7.7
    
    
    
    6.9
    
    
    
    6.4
    
    
    
    5.8
    
    
    
    4.9
    
    
    
    8.3
    
    
    
    4.7
    
    
    
    8.3Interest Income
    
    
    
    
    
    
    
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    
    
    
    
    
    
    
    
    0.0
    
    
    
    0.0Interest Expense
    
    
    2.3
    
    
    
    2.0
    
    
    
    4.1
    
    
    
    3.7
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    2.1
    
    
    
    3.72.3
    
    
    
    2.0
    
    
    
    4.1
    
    
    
    3.7
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    2.1
    
    
    
    3.7(Loss) income before provision for income
taxes
    
    
    5.4
    
    
    
    4.8
    
    
    
    2.3
    
    
    
    2.1
    
    
    
    4.7
    
    
    
    8.0
    
    
    
    2.6
    
    
    
    4.5Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    1.6
    
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    3.9Net (loss) income
    
    
    5.4
    
    
    
    4.8
    
    
    
    0.5
    
    
    
    0.4
    
    
    
    4.7
    
    
    
    8.0
    
    
    
    0.4
    
    
    
    0.7EBITDA (1)
    
    
    8.8
    
    
    
    7.8
    
    
    
    7.5
    
    
    
    6.8
    
    
    
    5.4
    
    
    
    9.2
    
    
    
    5.2
    
    
    
    9.1
 (1)
    
    EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is a measurement of Diamonds performance that is not
required by, or presented in accordance with, GAAP. EBITDA is not a measurement
of Diamonds financial performance under GAAP and should not be considered an
alternative to net income, operating income or any other performance measures
derived in accordance with GAAP or as an alternative to cash flow from operating
activities as a measure of its liquidity.Diamond presents EBITDA because it considers it an important supplemental measure
of its performance and believes it is frequently used by securities analysts,
investors and other interested parties in the evaluation of companies in its
industry, many of which present EBITDA when reporting their results.Diamond believes issuers of high yield securities also present EBITDA because
investors, analysts and rating agencies consider it useful in measuring the
ability of those issuers to meet debt service obligations. Diamond believes
EBITDA is an appropriate supplemental measure of debt service capacity, because
cash expenditures on interest are, by definition, available to pay interest, and
tax expense is inversely correlated to interest expense because tax expense goes
down as deductible interest expense goes up; depreciation and amortization are
non-cash charges.Diamond also uses EBITDA for the following purposes: (i) its executives
compensation plans base incentive compensation payments on its EBITDA performance
measured against budgets; and (ii) its credit agreement and its indenture for its
Notes use EBITDA to measure Diamonds compliance with
 14




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
    
    EBITDA does not reflect Diamonds cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
    
    EBITDA does not reflect changes in, or cash requirements for, Diamonds
working capital needs;
    
    EBITDA does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on
Diamonds debt;
    
    Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the future,
and EBITDA does not reflect any cash requirements for such replacements; and
    
    Other companies in Diamonds industry may calculate EBITDA differently
than Diamond does, limiting its usefulness as a comparative measure.
 Because of these limitations, EBITDA should not be considered as a measure of
discretionary cash available to Diamond to invest in the growth of its business.
Diamond compensates for these limitations by relying primarily on its GAAP
results and using EBITDA only supplementally.
  Six Months Ended
    
    Three Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(dollars in millions)
    
    (dollars in millions)Net income
    
    $
    5.5
    
    
    $
    0.4
    
    
    $
    4.7
    
    
    $
    0.4Interest
expense
    
    
    2.3
    
    
    
    4.1
    
    
    
    0.2
    
    
    
    2.1Depreciation and
amortization
    
    
    1.0
    
    
    
    1.2
    
    
    
    .5
    
    
    
    .5Provision for
income taxes
    
    
    0.0
    
    
    
    1.8
    
    
    
    0.0
    
    
    
    2.2EBITDA
    
    $
    8.8
    
    
    $
    7.5
    
    
    $
    5.4
    
    
    $
    5.2
 Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
 Net Sales.
 Operating Expenses.
 15




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Income From Operations.
 Interest Expense.
 Net Income
 Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
 Net Sales.
 Operating Expenses.
  Income From Operations.
 16




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Interest Expense.
 Net Income
 Liquidity and Capital Resources
 1 4
 Net Cash Provided by Operating Activities.
 Net Cash Used in Investing Activities.
 Net Cash Used in Financing Activities.
 Capital Expenditures.
 Liquidity.
 17




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ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Forward-Looking Statements
   18




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ITEM 4 CONTROLS AND PROCEDURES
    19




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PART II
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
      20




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 (a) Exhibits
 ExhibitNumber
    
    Description31.3
    
    Sarbanes-Oxley Section 302(a) Certification of the Chief Executive Officer.31.4
    
    Sarbanes-Oxley Section 302(a) Certification of the Chief Financial Officer32.3
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
Executive Officer.32.4
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
Financial Officer.
 (b) Reports on Form 8-K
    21




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SIGNATURE
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 DIAMOND TRIUMPH AUTO GLASS, INC.Date: August 15, 2005
    By:
    /s/  Douglas BoyleName:
    Douglas BoyleTitle:
    Chief Financial Officer 
(Principal Financial and Chief
Accounting Officer) 22